Flat Tax. I've been very curious about this for a long time.

[Crazy Guggenheim]

On the surface, anyways, it does sound like an ok idea. I hate be like this, but, the people who are pushing it are the RW types and I haven't heard too many other people say anything about it. So it makes me skeptical. Anyways, what are the pro's and cons on the Flat Tax?

[talidapali]

It's bad if it is not adjusted according to ability to pay...
a 12% flat tax on income would sound great on paper as long as you're earning more than a million dollars a year.
If you're earning minimum wage, a 12% flat tax would kill you.

[Crazy Guggenheim]

say, $25K a year wouldn't pay at all.


It's bad if it is not adjusted according to ability to pay...
a 12% flat tax on income would sound great on paper as long as you're earning more than a million dollars a year.
If you're earning minimum wage, a 12% flat tax would kill you.

[SubstituteTeacher]

At least with a flat tax you would not have to put up with the treachery of the IRS.

[webhead]

On the surface, anyways, it does sound like an ok idea. I hate be like this, but, the people who are pushing it are the RW types and I haven't heard too many other people say anything about it. So it makes me skeptical. Anyways, what are the pro's and cons on the Flat Tax?
Everbody pays the same % of tax... billionaires, millionaires, and the poor.

The minimum level of flat tax to maintain current revenue would be about 20% of adjusted gross income.

Since 1982, the most I have ever paid is 16.41% of adjusted gross income, lowest has been 3.54%.

A flat tax would be a tax increase for me, married filing jointly one income two children! A big tax increase! Meanwhile, millionaires get a big tax cut!

[Crazy Guggenheim]

At least with a flat tax you would not have to put up with the treachery of the IRS.

[Crazy Guggenheim]

It would still allow for certain exemptions, etc. but everything would be so simple. I'm going to research this more.

[SubstituteTeacher]

When my father died in 2002, the IRS penalized him dor not paying his estimated tax even though he had been dead for six months.

[webhead]

At least with a flat tax you would not have to put up with the treachery of the IRS.
Really? What treachery are you talking about?

Sorry, but not good enough reason to lower and middle class to pay more while upper class pays less!

Also, a flat tax without home mortgage interest deduction will negatively affect home sales.

[Crazy Guggenheim]

When my father died in 2002, the IRS penalized him dor not paying his estimated tax even though he had been dead for six months.

[Crazy Guggenheim]

Really? What treachery are you talking about?

[Crazy Guggenheim]

deductions you could still make, etc. Thought they call it "Flat Tax," there are still exceptions for somethings, e.g. mortgages, certain expenses, etc.


Really? What treachery are you talking about?

Sorry, but not good enough reason to lower and middle class to pay more while upper class pays less!

Also, a flat tax without home mortgage interest deduction will negatively affect home sales.

[talidapali]

It would still allow for certain exemptions, etc. but everything would be so simple. I'm going to research this more.
I believe that would be a graduated flat tax...which is what some Democrats have called for before. It would eliminate most of the deductions that the super-rich and merely rich can take now. It would lower individual tax rates for some folks, joint filers would take a hit though. Low-income people would probably not see that much difference from their taxes now, except that some of their crucial deductions would also go away.

There needs to be a reasonable agreement on where the poverty line is and whether or not people whose income falls below the poverty line should have to pay any tax or have any withheld from their paychecks. And by reasonable poverty line I mean a line where you make enough money to pay for EVERYTHING you need to live in this society, including access to the internet, utilities, food, clothing, transportation, HEALTH INSURANCE PREMIUMS, health care, etc.

I'm not talking about living in luxury, I'm talking Wal-Mart specials and coupon-clipping and making do with non-designer label stuff, the kind of living that is just getting by with nothing to spare left over. Lots of folks today fall WAY below that standard every day.

That would be what I consider a reasonable minimum standard poverty level. Raise it a little to allow for a modest amount of income that could be invested in a retirement plan and that would be what I call a reasonable maximum standard poverty level.

And that is exactly why Republicans will never allow a flat tax rate to be established, because if they applied standards like that...the super-rich and merely rich would be the ones to pay the lion's share of taxes in this country. Which is the one thing they absolutely don't want to do.

[webhead]

Problems with a flat tax

The notion of a flat tax does have a certain simplistic, egalitarian appeal. But it has three main flaws: 1) It seeks to improve something that is already completely equal; 2) It forces middle-class taxpayers to subsidize the wealthy (especially those incarnations such as Forbes' that exempt "unearned" income such as the interest on his invested inheritance, so that working people would support the idle rich); and, 3) It confuses much-needed tax reform and tax simplification in defining taxable income with the unrelated issue of whether the rate applied to that income is flat or graduated. Anyone who wants to support a flat tax better run the numbers first and see how much more they're going to pay!


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[Crazy Guggenheim]

That's one of the things I get concerned about when the "Flat Tax" is raised.



2) It forces middle-class taxpayers to subsidize the wealthy (especially those incarnations such as Forbes' that exempt "unearned" income such as the interest on his invested inheritance, so that working people would support the idle rich);

[Crazy Guggenheim]

I believe that would be a graduated flat tax...which is what some Democrats have called

[homerow]

flat tax for corporations doing business in the united states - thereby eliminating any tax benefit from going offshore.

gradual tax until $70000 or so - and i agree, nothing under $25000. then, flat tax is cool by me.

but as long as a loaf of bread cost the same for me as it does dick cheney, an across the board flat tax will hurt me, the poor, and benefit him, the rich.

[GymGeekAus]

At least with a flat tax you would not have to put up with the treachery of the IRS. Probably not.

Certainly there would still be unscrupulous invidivuals who attempted to hide their income from the IRS. So they'd still be doing audits and investigations.

[GymGeekAus]

And feel free to accuse me of being a socialist, but I think savings must be taxed. If only to take back a chunk of the change the uber-rich has swindled out of us.

In other words, the estate tax doesn't happen early enough.

[galilei]

It forces middle-class taxpayers to subsidize the wealthy (especially those incarnations such as Forbes' that exempt "unearned" income such as the interest on his invested inheritance, so that working people would support the idle rich);
There's a whole class of income called 'passive income' right now, which includes rent, that is almost tax free.

flat tax for corporations doing business in the united states - thereby eliminating any tax benefit from going offshore.

We need this yesterday, if not sooner.

[Icky]

There's a whole class of income called 'passive income' right now, which includes rent, that is almost tax free.

We need this yesterday, if not sooner.
Rent Income is "passive"... believe me, I pay taxes on the rent money I collect...
It's like this: I own a business... AND I own the land and building on which that business exists... The two are separate! So... every month, I pay myself rent... Well, actually, the Business pays Me rent for the priviledge of 'doing business' on my land and in my building.

This Rent is claimed as "Income" by Me personally, and I have to pay tax on it just as if it were any other kind of income.

At the end of the year, when my business reports it's 'income' (profit), and I report my Personal Income (Rent collected thru the year)... the two are added together to come up with My Total Income... Since I am an LLC (Limited Liability Corp.), all money made by the business passes through Me (an individual) for the purposes of tax payment.

So... if I charged myself 1 dollar a month rent, OR $20,000.00 a month, it wouldn't matter... The 1 dollar rent would make my business more profitable... the 20K rent would make ME more income... but either way, at the end of the year, I have to pay the tax....

True... there is a "Self Employment Tax" that is lowered a wee bit by having high rent... but if I artificially make my rent Uber High, you can believe that will set up a little red flag and I may target myself for some trouble...

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Also, from what I have heard and read on many such threads in the past, the top 1% pay less in taxes (as a percent of their income) than the rest of us... Instead of paying approx 45% (LIKE ME!!!), they pay something like 10% or less... if this is true, To me, the Flat Tax sounds like a wonderful idea!

Like this: Say Bill Gates makes $2 Billion and pays a flat 20% = $400 Million in taxes
Say I make $200K = $40K in taxes

Believe me!! That sounds like a friggin Bargain! I'd love that!

Say I make $25K = $5K in taxes... Still sounds good to me...
When I was making $24,900/yr... I was paying approx $6,500 a year in Income tax... woulda saved me about $1,500.

I am only speaking of income tax here... but... seems like, from my experience, this isn't an all together bad idea....